How electric cars are driving copper – and which stocks are winning
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Cobalt and lithium get all the love amid growing demand from the electric car industry — but copper is likely to enjoy even bigger benefits.
Within ten years total copper consumption in all types of electric vehicles could account for 5 per cent of the global market.
Morgan Stanley expects electric cars to gobble up 1.1 million tonnes of copper by 2025. That’s expected to grow to 1.7 million tonnes by 2027 according to the International Copper Association (ICA).
Today electric cars account for only about 185,000 tonnes. The global market for copper is now about 23.9 million tonnes, the International Copper Study Group says. Demand is expected to rise to 28 million tonnes by early next decade.
Electric or hybrid cars and buses are expected to reach 27 million by 2027, up from 3 million last year, according to the ICA.
That’s already helping drive increased prices in copper stocks — especially ASX small caps.
King River Copper (ASX:JRC) – profiled this week by Stockhead columnist Tim Treadgold – has enjoyed a massive share price spike of 1160 per cent over the past 12 months.
Riedel Resources (ASX:RIE) is up 485 per cent for the past year. Alderan Resources (ASX: AL8) has gained 447 per cent since listing in June.
See our table below showing how 85 ASX-listed copper stocks have performed in the past year.
A typical electric car needs almost four times the amount of copper (75kg for a plug-in) compared to an average combustion engine vehicle, Morgan Stanley estimates.
The electric car battery accounts for about 40kg of that copper while the remainder is in the electric motor and vehicle wiring.
Then there’s the charging infrastructure. Fast chargers require up to 8kg of copper per unit — and that in turn will need additional grid infrastructure, “multiplying the impact on copper demand”, according to Morgan’s On the Charge report released last year.
“If you go to any of these Tesla charging stations and you pick up the cable from the wall that plugs into the vehicle and you just feel the weight of that cable, it’s all copper inside there,” says Walter Richards, CEO of copper and gold explorer Havilah Resources (ASX:HAV).
Down the track, electric cars are expected to integrate roof-mounted solar panels which would also require copper.
Best performing copper stocks
Stockhead’s review of the performance of 85 ASX copper stocks over the past year suggests miners that dabble in more than one battery metal are seeing the greatest investor interest.
That’s not surprising, because 98 per cent of the world’s cobalt is the by-product of nickel and copper production.
Among the top gainers (see table below) in the past year is Riedel Resources (ASX:RIE), which is earning into a cobalt and copper project in Spain.
The company, which has a market cap of $27.2 million, has seen its share price jump 485 per cent to 7.2c.
Taruga Gold (ASX:TAR) has witnessed a 366 per cent increase in its share price.
The company recently announced it had inked an option agreement to acquire a cobalt and copper project in the Democratic Republic of Congo.
Havilah, meanwhile, only recently started looking at the cobalt within its landholdings, and its share price over the past year has slipped over 61 per cent.
Benefits of copper
Havilah this week released a new cobalt resource for its Kalkaroo copper, cobalt and gold project in South Australia.
But while the company is making cobalt a focus, Mr Richards says Kalkaroo is already economic with just the copper and gold.
“Our projects are not dependent on cobalt working or nickel working, our projects are actually profitable, economic projects based on copper that has got a very positive outlook,” he told Stockhead.
“I think a lot of people are just purely caught on the cobalt hype and they’re not really looking at all the underlying fundamentals that will support those projects being successful.”
Here’s a table showing how 80+ ASX copper stocks have fared over the past year. Search or scroll to reveal more.